Long-term forecasts are usually less accurate than short-term forecasts because
Understand the Problem
The question is asking about the accuracy of long-term versus short-term forecasts in terms of their standard deviation of error. It's important to evaluate how each type of forecast relates to the mean of the errors.
Answer
Long-term forecasts have a larger standard deviation of error relative to the mean than short-term forecasts.
Long-term forecasts have a larger standard deviation of error relative to the mean than short-term forecasts.
Answer for screen readers
Long-term forecasts have a larger standard deviation of error relative to the mean than short-term forecasts.
More Information
Long-term forecasts are less accurate because they are more susceptible to unexpected changes and variables that become more numerous or impactful over longer periods.
Tips
Confusing the standard deviation of error between long-term and short-term. Remember, greater uncertainty in long-term forecasts leads to higher error.
Sources
- Ch 7 Flashcards - Quizlet - quizlet.com
- Long-term forecasts are usually less accurate than - Chegg - chegg.com
- One of the characteristics of forecasts is long term ... - Course Hero - coursehero.com
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